Question 15 (3 points) Saved Assume that a Cobb-Douglas production function is a good representation of the economy, the substitution effect is stronger than the income effect, the real wage is flexible, and that the economy was initially at equilibrium. Suppose that an earthquake hits the economy, destroying a large number of homes and manufacturing factories (including machines within the factories) but not causing any deaths or injuries in the population. What type of shock has occurred in the economy? A positive labor demand shock A negative labor demand shock O A positive labor supply shock O A negative labor supply shock Previous Page Next Page Page 15 of 20